New Obama health plan seeks $10B more from pharma

US President Barack Obama’s newly revised health reform plan would cost $950 billion over the next decade and secure a further $10 billion from drugmakers - over and above the $80 billion they have already pledged - for the 10 years beginning 2011.

The “President’s Proposal,” released ahead of his bipartisan health care summit on Thursday (February 25), would obtain the extra $10 billion from the industry in the form of fees on brand-name drugs, but these would not begin until 2011. The fees would be used to help pay for the Medicare prescription drug benefit, completely closing the programme’s “doughnut hole” coverage gap which occurs when an enrollee’s annual drugs bill reaches $2,830, after which they have to pay their costs out-of-pocket until their annual spending hits $4,550. At that point, the federal government starts to pay again, covering 95% of the enrollee’s drug costs.

The Proposal - put forward by the President himself - “builds off the legislation that passed the Senate and improves on it by bridging key differences between the House and the Senate as well as by incorporating Republican provisions that strengthen the proposal,” said the White House in a statement.

Among a number of initiatives aimed at improving access to innovative therapies for US patients, the President’s Proposal would end the “collusion” of brand-name drugmakers paying generics producers to keep their cheaper copycat versions off the market. Such “pay for delay” deals which “limit or forego research, development, marketing, manufacturing or sales of the generic drug” would be prohibited, except in cases where the companies were able to prove that the their settlement could “outweigh the anti-competitive effects of the agreement.” The cost to consumers of such pay-for-delay deals totals $35 billion over a ten-year period, according to estimates by the Federal Trade Commission (FTC).

FTC chairman Jon Leibowitz said the agency was “delighted” that the President had included ending pay-for-delay drug settlements in his health care proposal. “When drug companies agree not to compete, consumers lose - ending pay-for-delay settlements will help control drug costs,” said Commissioner Leibowitz.

However, Kathleen Jaeger, chief executive of the Generic Pharmaceutical Association (GPhA) said the industry group was “deeply disappointed” at the proposed ban on settlements of generic patent challenges.

“The majority of settlements have proven to be abundantly pro-consumer by making lower-cost generic drugs available long before patents on the brand products were scheduled to expire,” said Ms Jaeger. “The generic industry intends to work diligently to oppose the ban on patent settlements because it is bad public policy and will not reduce health care costs or increase consumer access, in contradiction to the purpose of the Administration’s proposal,” she added.

The President’s plan would also extend discounts on drugs to hospitals and communities that serve low-income patients, and establish a new pathway to create generic versions of biological products “so that Americans have access to effective, lower-cost alternatives.”

Moreover, he would introduce transparency measures requiring makers of drugs and other health products to disclose all gifts made to and financial arrangements with individual doctors or groups, and pharmacy benefit managers (PBMs) to reveal details of their drug pricing deals and negotiations.

House Republican Leader John Boehner immediately slammed the proposal, saying Pres Obama had “crippled the credibility” of Thursday’s summit “by proposing the same massive government takeover of healthcare based on a partisan bill the American people have already rejected.”